by David Safier
NOTE: This is the seventh in a series of recent posts examining Imagine Schools. (Here are 1, 2, 3, 4, 5 and 6.) If you have ideas or information to add, please leave comments at the end of the post or email me at email@example.com. I keep all email correspondence confidential.
It looks like Imagine Schools' problems are definitely escalating from the educational to the financial. When the Wall Street Journal has an article (subscription required) about the financial impacts of Imagine Schools' closings in St. Louis, you know there's something happening.
In the past few months, Imagine lost its contracts to manage seven schools in Missouri and two in Georgia due to criticism about poor test scores and financial mismanagement. Imagine was forced to close its schools in those states, leaving Entertainment Properties in a pinch to fill the vacant buildings.
Those nine schools represent a $72 million investment for Entertainment Properties and one-third of the number of leases the company has signed with Imagine, which currently operates about 75 schools nationwide.
Entertainment Properties stock value has dropped 9% since the school closings were announced.
And here's an encouraging passage.
[I]t's not clear how large a role for-profit companies will play in the expansion of charter schools. Some school boards are frowning on using taxpayer funds to pay rent to profit-making companies. Ronald Lankford, deputy commissioner of the Missouri Department of Elementary and Secondary Education, said that Imagine was paying closer to 20% to 25% of the state money on rent and other expenses related to the maintenance of the school facilities. "It did not appear that sufficient funding was set aside to go directly into school instruction," he said.
Ken Libby continues his wonkier-than-mine coverage of the story with a new post on his blog, containing all kinds of detailed information. One of the options Entertainment Properties CEO David Brain is talking about is leasing the now-vacant school buildings in St. Louis to other charters. Sounds reasonable, except the problem Brain isn't mentioning is the absurdly high rents Imagine Schools paid for those properties. No other charter is likely to spend, for example, $2.28 million a year for the school building that housed Imagine Academy of Environmental Science and Math. Lower rents are going to cause some discomfort for Imagine Schools, Entertainment Properties or both.